Add Aditya Birla Sun Life AMC Ltd For Target Rs.1,150 by Emkay Global Financial Services Ltd
ABSLAMC delivered a largely stable performance in Q4FY26, with MF QAAUM growing by ~14% YoY to Rs4.36trn, while monthly SIP contribution increased to Rs12bn, led by 16% QoQ growth in SIP registrations to 0.6mn. While revenue yields remained largely stable at 42.6bps, revenue at Rs4.58bn was largely in line with our estimates. PAT at Rs1.87bn was impacted by lower other income, but lower tax rate resulted in PAT coming largely in line with our estimates. While the gross impact of the TER regulation changes is estimated at 3-4bps, management plans to restructure commissions and other expenses, which is expected to result in a marginal to neutral impact on profitability. Further, improvement in investment performance has resulted in consistent flows across multiple ‘focus’ equity and hybrid products. Factoring in Q4 developments, we have made minor tweaks to our estimates, resulting in ~1-2% cut in FY27-28E PAT. We introduce FY29 estimates and maintain ADD with an unchanged Mar27E TP of Rs1,150, implying FY28E P/E of ~26x.
Yields remain largely stable, market share loss continues
ABSLAMC’s MF QAAUM grew by ~14% YoY (-2% QoQ) to Rs4.36trn, with equity AUM contributing to ~45%. MF QAAUM market share declined by 13bps QoQ to 5.3%, however, the company’s pace of market share erosion has reduced in recent quarters, driven by improvement in fund performance and consistent flows. Revenue from operations for Q4 stood at Rs4.58bn, declining ~4% YoY, and was largely in line with our estimates. Revenue yields remained broadly stable at 42.6bps during Q4FY26 vs 42.8bps in Q3FY26. EBITDA margin at 58.1% dipped by 190bps QoQ, led by a decline in revenue and higher other operating expenses. During Q4FY26, PAT at Rs1.87bn (-31% QoQ) was largely in line with our estimate of Rs1.9bn on account of lower-than-expected other income being offset by a lower tax rate during the quarter.
Marginal impact of regulatory change in TER
The change in TER regulation is likely to have a gross impact of 3-4bps on overall revenue, however, management plans to mitigate this through restructuring commissions and other expenses, resulting in a marginal to neutral impact on profitability. Management indicated that flow market share is broadly in line with book market share. Further, improved investment performance has driven consistent flows across flexi cap, balanced advantage, multi-asset allocation, mid-cap, and small-cap funds. With a focus on deepening its presence, the company plans to add several locations in FY27, thus strengthening its distribution network..
We maintain ADD, with an unchanged Mar-27E TP of Rs1,150
Factoring in Q4 developments, we have made minor tweaks to our estimates, resulting in ~1-2% cut in PAT over FY27-28E. We introduce FY29 estimates. Going forward, consistent flows, led by sustained investment performance, are expected to drive market share stabilization. We maintain ADD and Mar-27E TP of Rs1,150, implying FY28E P/E of 26x.
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